The housing crash is wrecking New Zealand’s real estate market, with overall commissions tanking 31% from the first quarter of last year and 47% from the first quarter of 2021.
Thus, the amount of commission income going to agents has essentially been slashed in half over the last two years.
Auckland’s agencies have been hit the hardest, with gross residential commissions estimated to have totalled $114 million in the first quarter of this year, down 40% from Q1 2022 and down 58% from Q1 2021.
With the exception of Q2 2020, when real estate activity was severely constrained by Covid shutdowns, this year’s expected national first quarter real estate commissions are the lowest since Interest.co.nz began tracking them in 2016.
In response, real estate agents are leaving the industry for greener pastures.
The number of people with active licences as salespeople or agents decreased from 15,415 at the end of March last year to 14,808 at the end of March this year, a decrease of 607 (-3.9%). That’s according to the Real Estate Authority, the statutory body that regulates the industry.
The number of active real estate firm licences also decreased, from 906 at the end of March 2017 to 895 at the end of March this year.
Additionally, there has been a significant increase in the number of licence holders who choose to suspend their licences, which means they are no longer employed in the business but may do so in the future by renewing their licences.
REA Chief Executive Belinda Moffat that agents are experiencing “a tough market with low stock, reducing prices, increasing interest rates and cost of living challenges”.
This is the polar opposite of the conditions experienced between 2020 and 2020 when “REA saw a surge in new licence applications as more people entered the real estate profession during the hot real estate market and when other industries had slowed in response to Covid-19 conditions”.
New Zealand recorded one of the world’s biggest house price booms over the pandemic.
Now it is experiencing one of the largest busts, with home prices nationally down nearly 17% from their peak and sales volumes down 15% year-on-year.
With New Zealand’s economy now in recession and the Reserve Bank remaining hawkish on interest rates, agents will be living on starvation commissions for a while yet.
